Apollo Nears European Private Credit Deal with BNP Paribas
Apollo Global Management and BNP Paribas are reportedly nearing a deal to form a partnership for a major European private credit platform. The potential tie-up reflects a growing trend of private equity firms collaborating with traditional banks to engage in direct lending to corporations, bypassing syndicated loan markets.
This partnership is modeled after Apollo's $25 billion private credit agreement with Citigroup in North America, signaling a strategic expansion of this collaboration model into the European market. The collaboration will focus on originating and arranging loans for corporate and private equity clients across Europe. The European private credit market has seen significant growth, with assets under management reaching approximately $500 billion in 2024, a substantial increase from $50 billion in 2010. This market is growing at nearly twice the rate of its U.S. counterpart and now accounts for about 30% of the global private credit market. For BNP Paribas, a major player in European investment-grade bonds and leveraged loans, this partnership provides a way to compete with the burgeoning private credit market. Tighter banking regulations since the 2008 financial crisis have made direct lending less attractive for traditional banks, creating an opening for such collaborations. Apollo operates one of the largest private credit platforms globally, with $392 billion in credit assets under management as of 2025. These partnerships leverage the bank's extensive client network for loan origination and Apollo's significant capital base for funding, creating a symbiotic relationship. This deal is part of a larger trend of convergence between traditional banking and private credit. Other major players in the European private credit space include firms like Ares Management, Alcentra, and BlueBay Asset Management. The structure of these arrangements allows banks to maintain client relationships and earn fees while reducing their balance sheet exposure, a key consideration under current capital requirements. Meanwhile, private credit firms gain access to a wider range of deal flow from established corporate and private equity borrowers. The growing demand for flexible and rapid financing solutions, particularly for middle-market companies and private equity-backed deals, is a primary driver of the private credit market's expansion. In 2023, private credit funded an estimated 85% of leveraged buyouts. Looking ahead, the technology sector is anticipated to see the most growth in direct lending in Europe. The UK and Ireland are expected to experience the highest volume of new private credit loans.
